Barely anyone needs convincing that the state of Hawaii could be one of the absolute best places to invest in an Airbnb property. Hawaii's beautiful islands, the amazing beaches, the wonderful nature, and more attract more than six million visitors every year. But before you launch an Airbnb business there, it's important to check out Hawaii short-term rental laws.
While Hawaii has a statewide definition of STRs, there are very few rules and regulations that apply across the entire state. Instead, vacation rental laws are generally implemented locally, at the county level, and they can vary significantly from one market to another.
In this article, we'll cover what Airbnb hosts and property managers need to know about the Hawaii short-term rental bill, licensing requirements, necessary documents, tax implications, and regulations by city. Nevertheless, you should also check with a local real estate attorney or the local government before getting started as rules are subject to change.
Learning the Hawaii short-term rental regulations is crucial for the success of your business, but true success comes from staying ahead of the market and making informed, data-driven decisions to outperform the competition each and every time.
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Hawaii's definition of a short-term rental
The state of Hawaii officially refers to short-term rentals as transient accommodations. Chapter 237D of the Transient Accommodations Tax Law defines transient accommodations as the furnishing of a room, apartment, suite, single family dwelling, or another similar property to a transient for fewer than 180 consecutive days for each letting in a hotel, apartment hotel, motel, condominium, cooperative apartment, dwelling unit, or rooming house that provides living quarters, sleeping, or housekeeping accommodations.
While some Hawaii cities and counties define STRs as residential properties rented out for less than 30 consecutive days, others adopt the statewide definition.
How to start a short-term-rental business in Hawaii
When launching a Hawaii vacation rental business, property owners need to go through a few steps to make sure that they comply with statewide and local requirements.
Here is what's needed to start an Airbnb in Hawaii:
- Zoning permits and STR licenses: While there is no statewide requirement for short-term rental licensing, most Hawaii counties require some sort of a license or a permit so that vacation rentals can operate legally. Applications typically require information about the property, the owner, the operator, the emergency contact, the site, and the safety equipment.
- Zoning district regulations: The majority of local authorities in Hawaii have very specific regulations where STRs are allowed and where they are not allowed. Owners need to confirm that their property is located in a permitted zone before becoming an Airbnb host.
- Tax registration: Hawaii Airbnb property owners need to register with the Hawaii Department of Taxation for a transient accommodations tax (TAT) license for a fee of $5 for 1-5 units and $15 for 6+ units and for a general excise tax (GET) license for a fee of $15. These licenses need to be available when applying for STR permits.
- Liability insurance: Eligible properties need to have short-term rental insurance providing at least $1,000,000 in general liability coverage.
- Payment of fees: In most cases, property owners have to pay a few fees to apply for tax licenses, zoning permits, and other licenses.
- Required paperwork: Along with their application for a STR license or permit, Hawaii property owners usually need to submit proof of ownership, proof of residence, site plan, floor plan, inspection report, and signed statement of compliance with applicable regulations.
Before moving forward with your Hawaii short-term rental business, you should check the most recent laws and rules that are usually available on the county government websites. Airbnb regulations are subject to frequent changes, especially in Hawaii, where there has been a growing pressure from different stakeholders to limit the Airbnb industry to provide more abundant and more affordable housing options for the local population.
You can also connect with a local real estate lawyer or Airbnb manager to receive guidance and ensure that your business is launched on the right footing.
Short-term rental licensing requirements in Hawaii
Hawaii short-term rental properties need to have a TAT and a GET license in order to pay due taxes at the state and local level. These licenses can be obtained from the Hawaii Department of Taxation.
There are no other short-term rental licenses and permits that are required at the state level. Individual Hawaii counties demand local licenses, permits, and registrations though. Each county imposes its own application fee that can be as high as $1,000.
License renewals for short-term rentals in Hawaii
Hawaii tax licenses do not need to be renewed once they have been issued.
Meanwhile, local zoning permits, STR licenses, and registrations might need to be renewed on an annual or other basis in some jurisdictions. This needs to be done prior to the expiration date to ensure legal Airbnb operations. Renewals are subject to fees that can reach up to $750.
Required documents for Hawaii short-term rentals
To get ready to list their Hawaii property on Airbnb and other short-term rental platforms in a legal manner, owners need to prepare a number of documents including:
- Personal ID
- Federal EIN
- Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
- TAT registration
- GET registration
- Proof of ownership
- Proof of residence
- Property site plan
- Property floor plan
- Proof of payment of fees
Each Hawaii county requires somewhat different documentation, so you should check on the website of the local authorities what exactly is needed in your jurisdiction to ensure a smooth and speedy application process.
Hawaii short-term rental taxes
Hawaii short-term rentals are heavily taxed by the Hawaii Department of Taxation as well as other tax authorities.
Airbnb hosts need to pay the following taxes:
- Hawaii State TAT: 10.25% of gross rental income
- County TAT: Varying rates
- Hawaii State GET: 4%
- County GET surcharge: Varying rates
- Short-term rental income tax: Federal and local income tax rates
- Property tax: State and municipal property tax rates
As you can see, taxes can amount to a significant portion of the money you make from Airbnb in Hawaii. Thus, it's important for hosts to benefit from all applicable tax deductions in order to reduce their taxable income as much as possible.
Following is a list of eligible business expenses to include as deductibles:
- Real estate depreciation (Hint: Conduct a short-term rental cost segregation study to maximize tax benefits.)
- Mortgage interest
- Mortgage insurance premium (MIP)
- Property tax
- Airbnb insurance
- Furniture, appliances, and electronics costs
- Property management fees
- Cleaning fees
- Marketing and advertising costs
- Accounting, legal, and other professional service fees
- Maintenance
- Home office expenses
- Business travel expenses
Hawaii Airbnb property owners need to familiarize themselves with all applicable taxes in order to collect them and remit them on time to avoid legal problems. Similarly, they should be aware of available deductibles to optimize their cash flow and profit.
Statewide short-term rental rules in Hawaii
The state of Hawaii does not really have a bill that regulates short-term rentals at the state level. While the state defines vacation rentals in a certain way, even this definition is subject to interpretation and adaptation in each county.
Generally speaking, Hawaii has left it up to county authorities to regulate Airbnb rentals in line with the housing needs of local communities.
What is the new law in Hawaii about Airbnb?
On May 3, 2024, Governor Josh Green signed Senate Bill 2919 into law in an effort to provide Hawaii counties with more power to regulate short-term rentals in order to address the affordable housing crisis in the state.
This new Airbnb law in Hawaii has two main provisions:
- Counties are now allowed to regulate the time, place, manner, and duration in which land and structures may be used, by zoning ordinance.
- Counties are allowed to amortize or phase out transient accommodation uses in residential or agricultural zoned areas.
In practice, this means that now local authorities have more power to regulate and limit vacation rentals in line with the needs of local residents, including prohibiting them altogether.
Some Hawaii counties have been faster in adjusting regulations after the introduction of this new law than others. We still have to see how local Airbnb laws might change as the impact of the recent legislation rolls out.
Short-term rental laws by Hawaii city
In the absence of statewide Hawaii Airbnb regulations, each major island has introduced its own laws to limit the spread of the vacation rental industry for the benefit of residents while still allowing local economies to enjoy the advantages of STR businesses.
Following are the short-term rental rules in some of the best markets for Airbnb across the state of Hawaii.
1. Honolulu, Hawaii short-term rental laws
The City and County of Honolulu define short-term rentals, also referred to as vacation rentals, as lodgings that provide guest accommodation for fewer than 30 consecutive days. According to Ordinance 22-7 and Ordinance 24-14, they are permitted only in resort-zoned areas and a couple of specific apartment-zoned areas. Investors can use this map to check the eligibility of properties they have in mind. The only exception to this zoning regulation are grandfathered vacation rentals that have been operating since before October 22, 1986.
There are two types of Honolulu STRs:
- Bed and breakfast homes (B&Bs): In a B&B, the owner or permanent resident is present during the stay, and no more than two rooms may be rented, with maximum transient occupancy of two adults per room.
- Transient vacation units (TVUs): A TVU refers to a whole home rental or an unhosted rental, where the maximum transient occupancy is two adults per room.
Honolulu Airbnb rentals need to hold a valid STR registration, which can be obtained online. Applying for a registration requires:
- Title report
- GET license
- TAT license
- Real property tax home exemption for B&Bs
- Insurance coverage of a minimum of $1,000,000 per occurrence in commercial general liability or homeowner's insurance with business liability coverage
- Evidence that STR is permitted by an applicable association
- Informational binder including a floor plan (identifying the location of all transient occupant bedrooms, the maximum occupancy of each bedroom, and the location of all fire exits), parking plan, trash collection and disposal instructions, copy of the house rules, and list of emergency contacts
- Statement of compliance
- Initial registration fee of $1,000
STR registrations in Honolulu are not transferable, and they are valid for one year. Hosts need to apply for a STR registration renewal one to three months before expiration. Renewal applications require similar, albeit fewer documents than initial registrations, and the renewal registration fee is $500.
While Honolulu vacation rental regulations limit the geographic scope, savvy investors might be able to locate profitable opportunities within the allowed zones as long as they know how to find Airbnb properties for sale with strong potential. After all, as the capital of Hawaii and the main gateway to the island chain, Honolulu remains an attractive destination for different types of travelers, including vacationers, remote workers, and business travelers.
It's worth mentioning that Oahu, Kaneohe, and Kapolei–other top Airbnb locations in Hawaii–follow Honolulu short-term rental laws.
2. Maui, Hawaii short-term rental laws
Currently, the County of Maui regulates short-term rentals under Article IV of the Maui Code of Ordinances. There is no specific definition of STRs, so Maui generally abides by the statewide definition.
There are three different types of Airbnb-style properties in Maui:
- Bed and breakfast homes: The owner must live on site, and in some cases the manager can live on site instead.
- Short-term rental homes (STRHs): These constitute single family residences operated by designated managers.
- Transient vacation rentals: The owner/manager may live or not live on site.
All types of Maui STRs require a permit, and there is a cap on each type of permit per community plan area.
To apply for a short-term rental home permit, the single family dwelling must have been constructed at least 15 years before the date of application, and the applicant must have owned the dwelling for at least 15 years. Moreover, an applicant can hold only one STRH permit, and permits are not transferable.
To apply for a permit, the owner needs to submit the following:
- Applicant's name, address, and phone number
- Verification of property ownership
- Tax map key number of the lot where the property is located
- Site and floor map identifying the location of parking spaces and bedrooms
- List of the names and addresses of owners and lessees of record within a 500-foot radius of the lot of the proposed STRH
- Planning department STRH inspection report
- Certification form signed by the owner attesting to various regulations
- TAT license
- GET license
- Application fee
Permits are valid for up to three years and need to be renewed afterwards.
Following the new Hawaii short-term rental law, in mid-2024, the Maui Planning Commission voted to recommend adoption of a new bill that would phase out more than 7,100 short-term rentals located in apartment-zoned districts, mostly in South and West Maui. If the proposed bill becomes a law, these vacation rentals will need to stop operations by January 1, 2026 at the latest. They have the option of turning into long-term rentals. This measure is being considered in order to provide much-needed housing for local residents.
In sum, Maui has some of the strictest Airbnb laws across the state of Hawaii, but non-owner occupied short-term rentals might still be an option. It's recommended for investors who are interested in a Maui Airbnb property to consult with one of the top Airbnb property management companies operating in the area to discuss options.
Investors should also take into consideration that Hana and Kaunakakai fall under the Maui short-term rental laws.
3. Big Island, Hawaii short-term rental laws
Airbnb rentals in the Big Island, also referred to as the Island of Hawaii or Hawaii Island, are governed by the County of Hawaii short-term rental regulations, where the island is located. This is done via Ordinance 2018-114. Meanwhile, the County of Hawaii Planning Department Rules of Practice and Procedure define a short-term vacation rental (STVR) as a dwelling unit that has no more than five bedrooms for rent on the building site, that is rented for periods of less than 30 consecutive days, and whose owner or operator does not reside on the building site.
Big Island short-term vacation rentals are permitted in:
- V, CG, and CV districts
- Residential and commercial zoning districts situated in the General Plan Resort and Resort Node areas
- RM district for multifamily dwellings with a condominium property regime
It's important to note that STVRs operating outside of permitted zoning districts before April 1, 2019 can continue to operate their Airbnb business as long as they obtain a short-term vacation rental nonconforming use (NCU) certificate, which needs to be renewed annually. The first-time application fee is $500, and the annual renewal fee is $250.
Hawaii Island short-term vacation rentals need to be registered. Submitting an application requires the following:
- STVR address
- Applicant's name, address, phone number, and email
- Owner's name, address, phone number, and email
- Reachable person's name, address, phone number, and email
- Owner authorization if applicable
- Final approvals from Building Division
- state of Hawaii TAT and GET licenses
- Site plan including all property boundaries, dimensions, setbacks, and easements; location of existing and proposed structures, driveway access, swimming pools, ancillary structures, eaves, and overhangs; designated parking spaces; reference points such as roadways, shoreline, and others; and a table indicating the total square footage of each structure on the property
- Floor plan identifying the location and use of all rooms
- Statement of compliance
- Processing fee of $500
According to the Big Island short-term rental law, registrations are not transferable, and a new application needs to be submitted in case of changing the owner or the reachable person or modifying the property. Registrations don't need to be renewed on an annual basis.
All in all, Big Island Airbnb regulations allow non-owner occupied short-term rentals in a range of zoning districts. As one of the most popular Hawaii islands, this can be a great location for investing in a vacation rental with a strong average daily rate (ADR) and occupancy. To find the right property in a permitted location, you could work with one of the best real estate agents or a local property manager who is familiar with regulations as well as top locations.
Keep in mind that Volcano, Naalehu, Hilo, and Mountain View, which are other top short-term rental markets in the state of Hawaii, abide by the County of Hawaii short-term rental regulations.
4. Kauai, Hawaii short-term rental laws
The County of Kauai allows short-term vacation rentals in Visitor Destination Areas (VDAs) only.
There are two types of Kauai short-term rentals:
- Homestays: These are regulated by Ordinance 1002 and refer to transient accommodations that are provided to visitors for fewer than 29 consecutive days and where homestay operations are limited to no more than three guest rooms. The owner needs to be physically within the County of Kauai, residing at the homestay operation site, and physically available to address the needs and concerns of guests throughout homestay operations.
- Single family transient vacation rentals (SFTVRs): These are regulated by Ordinance 904 and do not require the presence of the owner on site during rental activities.
Both homestays and SFTVRs that were operational prior to July 31, 2009 can continue working outside VDAs as long as they have a nonconforming use (NCU) certificate. This certificate needs to be renewed annually for a fee of $750.
Kauai homestays need to have a homestay zoning permit. Registrations for the permit require the submission of the following:
- Owner's name, address, phone number, and email
- 24/7 emergency contact's name and phone number
- Property's zoning permit number and address
- Website links that advertise the homestay
- Documents showing proof of primary residence
- Valid TAT license
- Valid GET license
- Documentation that there is at least one multi-purpose A:B:C fire extinguisher mounted near an exit and inspected annually
- Registration fee of $750
Homestay zoning permits are not transferable. Moreover, they need to be renewed on an annual basis, and the renewal fee is $750.
Kauai vacation rental laws allow both owner-occupied and non-owner occupied short-term rentals within Visitor Destination Areas. Considering the unique tropical rainforest and the beautiful beaches that attract scores of tourists every year, it's worth looking for Airbnb properties for sale in the allowed locations as profits can be significant.
Investors interested in other tor-performing Airbnb locations within Hawaii should know that vacation rental properties in Kapaa and Hanalei are governed by the Kauai short-term rental rules.
Do Airbnbs do well in Hawaii?
While Hawaii defines vacation rentals at the state level, they are generally regulated at the county level. The truth of the matter is that Hawaii has some of the most restrictive short-term rental laws nationwide, but savvy investors may still be able to find profitable opportunities in local markets that allow non-owner occupied short-term rentals.
Even with these rules, Hawaii remains one of the top locations for investing in an Airbnb property as a popular tourist destination for both domestic and international visitors. The high daily rates and the strong Airbnb occupancy lead to above-average revenue and excellent profit.
Ready to get started with Hawaii Airbnb investments? Contact one of the best Airbnb management companies operating in Hawaii to learn more and get prepared.
Once you're set up to start investing in Hawaii, Summer Forecast is your go-to platform for building a high-performing STR portfolio. With intuitive Airbnb data and forecasting tools, you can make smart investment decisions. You can evaluate new investments, optimize your portfolio, and stay ahead of the competition with accurate insights on revenue, occupancy, comps, and market trends. Ready to take your Airbnb investing to the next level? Find out how Summer Forecast can help.
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